Hedge Fund Superstars Think Advertising Is For Upstarts

It has been nearly a month since the JOBS Act allowed hedge funds
to advertise, but so far there have been few takers.
According to reporting by the FT, smaller "upstarts" have shown interest in
advertising, but the larger, more established funds view
advertising as sign of failure to raise capital.

Anthony Scaramucci, founder of Sky Bridge Capital, a fund
of funds, tells the FT, “The Goliaths in our industry are not
going to advertise... They think it is gauche and déclassé, and
their partners already have their private planes and their
beachside mansions in the Hamptons, so why disrupt the business
model?”

Investment
News also reported that advertising could draw
regulatory attention to hedge funds, which are "notoriously
private". A fund that wants to advertise would need to notify the
SEC and disclose its solicitation materials, which would expose
them to the SEC's scrutiny.

Another reason is that there is
still uncertainty surrounding the advertising rule. While the SEC
has allowed advertising, the Commodity Futures Trading Commission
has yet to authorize it, which could impact some firms trading
certain derivatives transactions.

But for smaller hedge funds, advertising could provide just
the exposure they need. “It presents an opportunity for the
Davids to come in with their slingshot, and we are working on our
messaging right now. If you choose the right weaponry, you can
take out Goliath,”
Scaramucci told the FT.